Sustainability Progress Slows as Corporate Priorities Shift
Event summary
- 90% of sustainability leaders report continued execution of strategies, but only 47% see progress meeting or exceeding expectations, up 10 points from 2025.
- 62% now view sustainability as both value creation and risk management, up from 35% in 2025, while those seeing it primarily as value creation dropped 31 points.
- 36% cite macroeconomic uncertainty as a top barrier to sustainability, up from 15% in 2025, with high investment costs (39%) and lack of data (30%) also major challenges.
- 78% anticipate negative operational impacts from physical climate risks in the next five years, up from 65%, though only 19% feel very prepared.
- 63% of respondents say key business decisions are now subject to sustainability criteria, up from 51%.
The big picture
Morgan Stanley's latest Sustainable Signals report reveals a strategic pivot in corporate sustainability, with firms increasingly balancing value creation with risk management amid macroeconomic headwinds. The shift suggests sustainability is becoming more deeply embedded in core business strategies, though progress is slowing as companies grapple with higher costs, data gaps, and regulatory demands. The findings highlight a broader industry trend toward integrating sustainability into financial decision-making, even as external challenges mount.
What we're watching
- Regulatory Compliance
- Whether rising regulatory pressures will accelerate or hinder sustainability progress amid economic uncertainty.
- Investor Expectations
- How shifting investor priorities will impact corporate sustainability strategies and resource allocation.
- Climate Preparedness
- The pace at which companies can enhance their readiness for physical climate risks while managing rising costs.
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